New Kentucky bill aims to encourage state coal use

Emboldened by Republican gains at the state and federal levels, Kentucky lawmakers are trying to revive a tax incentive to encourage electric utilities and industries to burn more of the state’s thermal coal.

State Representative Jim DuPlessis, chief sponsor of H.B. 165, said Monday the timing of the legislation could not be more auspicious with the incoming administration of President-elect Donald Trump and the GOP firmly in control of Kentucky’s governorship, House of Representatives and Senate for the first time in decades.

The November 8 general election catapulted Republicans into control of the House for the first time since 1920. And, as DuPlessis pointed out, they now have a supermajority in the 100-seat chamber.

Coal production and utility/industrial coal use have been falling in Kentucky in recent years, blamed by many Kentucky politicians on the Obama administration’s so-called “war on coal” and historically low natural gas prices.

The commonwealth still gets about 90% of its electricity from coal, down about 95% a few years ago.

A similar tax incentive for coal was on the books in Kentucky for several years before sunsetting in 2009. DuPlessis and others believe it at least helped stabilize coal production and coal’s use by utilities.

BILL PROVIDES $2/ST TAX INCENTIVE

Under the newly introduced bill, a state entity consuming additional Kentucky coal would receive a state tax credit of $2/st. As DuPlessis said, a utility that already purchases 100,000 st of Kentucky coal annually would not get a credit. But if it raised coal use by 50,000 st, it would receive a $2/st credit, or a $100,000 tax credit.

The move is necessary, he said, to allow Kentucky coal producers to compete with out-of-state rivals who have eaten into some of the state’s traditional coal sales.

“Coal usage is flat, so we’re not competing to get more sales but we can at least start buying more Kentucky coal,” DuPlessis said. “We’ve got miners out of work and miners the government is having to subsidize.”